Have you recently sold your home for a profit? If so, you may have to pay a tax on your financial gains. But before you start worrying about what you owe, our team at Dippy Chhina explain the tax rules you need to know to figure out what you have to report when you sell a home.
Question #1: Do I have to include the gain from the sale as part of my taxable income?
A: If you meet certain qualifications, you can exclude up to $250,000 of the profits you gained from selling your home. Married couples can exclude up to $500,000.
Question #2: Do I have to report the sale of my home on my tax return?
A: If you won’t have a taxable gain on the sale of your home and you sign a form that states this information, your real estate agent won’t have to send Form 1099-S Proceeds From Real Estate Transactions to the IRS or to you. If your agent does send you Form 1099, you have to report the sale of your home.
Question #3: What qualifications do I have to meet if I don’t want to report the profits from selling my home?
A: You must meet the following conditions if you want to exclude the gain from selling your home:
- You have to own the property for at least two of the past five years.
- You must have lived in the property for at least two of the last five years.
- You can’t exclude the gain from a home during the two-year period before the sale of your home.
Question #4: Can I deduct a loss on the sale of my home?
A: When you sell your home at a loss, it is considered a personal loss, meaning you cannot claim a deduction when you file your taxes.
Are you trying to sell your home but you’re worried about the tax implications? Then call 661.441.3304 today to speak with one of our friendly real estate agents in Santa Clarita. We are here to assist you.